Ecoyn 201 Quiz 1-4 Questions with Correct Answers Latest Update 2025/2026
Other things the same, as the price level decreases it induces greater spending on
a. net exports but not investment.
b. investment but not net exports.
c. both net exports and investment.
d. neither net exports nor investment. - Answers c
In the short run, a decrease in the money supply causes interest rates to
a. increase, and aggregate demand to shift right.
b. increase, and aggregate demand to shift left.
c. decrease, and aggregate demand to shift right.
d. decrease, and aggregate demand to shift left. - Answers b
Political Instability Abroad
Suppose that political instability in other countries makes people fear for the value of their
assets in these countries so that they desire to purchase more U.S assets.
Refer to Political Instability Abroad. What would the change in the interest rate created by
foreigners wanting to buy more U.S. assets do to investment spending in the U.S.?
a. make it rise which by itself would increase U.S. aggregate demand.
b. make it fall which by itself would increase U.S. aggregate demand.
c. make it fall which by itself would decrease U.S. aggregate demand.
d. make it rise which by itself would decrease U.S. aggregate demand. - Answers b
,The recessions of the 1970s are often attributed to
a. declining inflation expectations.
b. decreases in the money supply.
c. declines in the price of stock.
d. an increase in oil prices. - Answers d
When the price level falls, people want to
a. hold less money and the quantity of aggregate goods and services demanded increases.
b. hold more money and the quantity of aggregate goods and services demanded increases.
c. hold more money and the quantity of aggregate goods and services demanded decreases.
d. hold less money and the quantity of aggregate goods and services demanded decreases. -
Answers a
According to the theory of liquidity preference, if output decreases
a. people want to hold less money. This response is shown as a movement along the money
demand curve.
b. people want to hold more money. This response is shown as a movement along the money
demand curve.
c. people want to hold less money. This response is shown as a shift of the money demand
curve.
d. people want to hold more money. This response is shown as a shift of the money demand
curve. - Answers c
When the price level falls
a. the interest rate rises, so the quantity of goods and services demand rises.
b. the interest rate rises, so the quantity of goods and services demand falls.
, c. the interest rate falls, so the quantity of goods and services demand falls.
d. the interest rate falls, so the quantity of goods and services demand rises. - Answers d
Which of the following is an example of a decrease in government purchases?
a. The government increases personal income taxes.
b. The government decreases unemployment insurance benefit payments.
c. The Federal Reserve sells government bonds.
d. The government cancels an order for new military equipment. - Answers d
When the money supply increases
a. interest rates fall and so aggregate demand shifts left.
b. interest rates rise and so aggregate demand shifts right.
c. interest rates rise and so aggregate demand shifts left.
d. interest rates fall and so aggregate demand shifts right. - Answers d
The long-run aggregate supply curve shifts left if
a. the government removes some environmental regulations that limit production methods.
b. there is a natural disaster.
c. the capital stock increases.
d. None of the above is correct. - Answers b
Aggregate demand shifts right if at a given price level
a. taxes fall and shifts left if the money supply increases.
b. taxes fall and shifts right if the money supply increases.
c. taxes rise and shifts left if the money supply increases.
Other things the same, as the price level decreases it induces greater spending on
a. net exports but not investment.
b. investment but not net exports.
c. both net exports and investment.
d. neither net exports nor investment. - Answers c
In the short run, a decrease in the money supply causes interest rates to
a. increase, and aggregate demand to shift right.
b. increase, and aggregate demand to shift left.
c. decrease, and aggregate demand to shift right.
d. decrease, and aggregate demand to shift left. - Answers b
Political Instability Abroad
Suppose that political instability in other countries makes people fear for the value of their
assets in these countries so that they desire to purchase more U.S assets.
Refer to Political Instability Abroad. What would the change in the interest rate created by
foreigners wanting to buy more U.S. assets do to investment spending in the U.S.?
a. make it rise which by itself would increase U.S. aggregate demand.
b. make it fall which by itself would increase U.S. aggregate demand.
c. make it fall which by itself would decrease U.S. aggregate demand.
d. make it rise which by itself would decrease U.S. aggregate demand. - Answers b
,The recessions of the 1970s are often attributed to
a. declining inflation expectations.
b. decreases in the money supply.
c. declines in the price of stock.
d. an increase in oil prices. - Answers d
When the price level falls, people want to
a. hold less money and the quantity of aggregate goods and services demanded increases.
b. hold more money and the quantity of aggregate goods and services demanded increases.
c. hold more money and the quantity of aggregate goods and services demanded decreases.
d. hold less money and the quantity of aggregate goods and services demanded decreases. -
Answers a
According to the theory of liquidity preference, if output decreases
a. people want to hold less money. This response is shown as a movement along the money
demand curve.
b. people want to hold more money. This response is shown as a movement along the money
demand curve.
c. people want to hold less money. This response is shown as a shift of the money demand
curve.
d. people want to hold more money. This response is shown as a shift of the money demand
curve. - Answers c
When the price level falls
a. the interest rate rises, so the quantity of goods and services demand rises.
b. the interest rate rises, so the quantity of goods and services demand falls.
, c. the interest rate falls, so the quantity of goods and services demand falls.
d. the interest rate falls, so the quantity of goods and services demand rises. - Answers d
Which of the following is an example of a decrease in government purchases?
a. The government increases personal income taxes.
b. The government decreases unemployment insurance benefit payments.
c. The Federal Reserve sells government bonds.
d. The government cancels an order for new military equipment. - Answers d
When the money supply increases
a. interest rates fall and so aggregate demand shifts left.
b. interest rates rise and so aggregate demand shifts right.
c. interest rates rise and so aggregate demand shifts left.
d. interest rates fall and so aggregate demand shifts right. - Answers d
The long-run aggregate supply curve shifts left if
a. the government removes some environmental regulations that limit production methods.
b. there is a natural disaster.
c. the capital stock increases.
d. None of the above is correct. - Answers b
Aggregate demand shifts right if at a given price level
a. taxes fall and shifts left if the money supply increases.
b. taxes fall and shifts right if the money supply increases.
c. taxes rise and shifts left if the money supply increases.
